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Greening Enterprises: How to Assess and Develop Your Organization's Drive Toward Sustainability

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Introducing a new methodology to help organizations design and implement high-performing sustainability programs.

Introducing a new methodology to help organizations design and implement high-performing sustainability programs.

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  • 1. Greening Enterprises How to Assess and Develop Your Organization's Drive Toward Sustainability by Stephen Buchanan Buchanan_Stephen@bah.com David Erne Erne_David@bah.com Alan Falk Falk_Alan@bah.com
  • 2. Greening Enterprises How to Assess and Develop Your Organization's Drive Toward Sustainability Sustainability is all the rage these days, much to the In recent years, numerous private and governmental confusion of many organizations. Covers of Business sector organizations have faced tangible impediments Week, Fortune, the Economist and Vanity Fair, among other to their success as a result of environmental concerns publications and diverse media channels, have touted the and finite resources. For example, the global beverage value of transforming staid, run of the mill organizations industry has come under increasing scrutiny from into “green enterprises.” These enterprises place a premium concerned citizens in sensitive geographies regarding on protecting the environment in the products they make demands on local water supplies, prompting the and acquire or the services they provide, in how they need for concerted corporate responses to address manufacture products, and in how they deliver brands and stakeholder concerns and maintain corporate services to customers. reptutation. Personal products manufacturers have seen their market share and brand popularity erode But for many organizations, the thought of going green, due to supplier noncompliance with hazardous material while perhaps desirable on the surface, raises at least content restrictions. Meanwhile, the Department of two perplexing questions that are increasingly difficult to Defense is working with neighboring communities to navigate. The first is, "Why?" Beyond altruistic reasons, promote sustainable development around military many corporate executives and agency chiefs struggle to bases to increase natural habitats while minimizing delineate the benefits that a strategy built on sustainability encroachment that impacts the military's ability to actually brings to the organization. The other question is adequately train troops. a bit more intractable: "How?" Organizations interested in sustainability face a series of challenges in implementing Sustainability efforts are most effective when environmentally conscious business initiatives. approached strategically and systematically and are aligned with the organizational mission. In those Booz Allen Hamilton has developed a methodology cases, using resources (air, water, and land) more to resolve these complex issues. By pairing what we efficiently: call the Green Pulse Check and the Sustainable Green Enterprise Framework, we can diagnose and help improve a) Ensures their continuing availability for current and an organization’s capabilities to integrate environmental future activities and can deliver cost savings; considerations for enhanced business value and provide b) Provides a competitive advantage for responding to a clear roadmap for improving environmental performance regulatory change (carbon cap and trade programs across multiple dimensions at all stages of development or emerging contaminants); and execution. c) Enhances brand reputation to attract new customers Untangling the Questions and employees and to create a better relationship The answer to why sustainability should matter to an with the community; organization goes well beyond merely demonstrating d) Meets changing supply chain requirements; and good stewardship of the environment for the sake of appearances. Instead, sustainability’s true value lies e) Promotes greater levels of innovation, productivity, in supporting the ability of the enterprise to thrive as and risk management. environmental conditions and attitudes towards the environment change—and resource limits are realized. 1
  • 3. Another question that the prospect of implementing Green Pulse Check sustainability raises—How do I do it?—is more An organization’s environmental management maturity daunting, because it involves taking large steps that can be viewed along a continuum from compliance to could impact the organizational business model integration and, ultimately, to shaping strategy and and culture. leadership (see Exhibit 1). Organizations interested in sustainability often find At the lowest levels of sophistication, an organization themselves wondering: could be described as reluctantly embracing • How to establish enterprise-wide environmental environmental compliance. In these stages, the goals and objectives environment is seen as an inhibitor to accomplishing a mission and the organization merely follows the letter • How to identify current sustainability processes of the law typically on a reactive basis—and nothing in key areas else—in its adoption of green practices. • How to assess sustainability gaps In the middle of an organization’s evolution is • What approach to use when developing environmental management. At this point, the sustainability initiatives environment is considered part of existing operations. The organization may embrace such things as • Where to start integrating various tactics, advanced recycling and pollution prevention (P2) in a focused way, to maximize results programs, and may have implemented energy efficiency Exhibit 1 | Environmental Management Continuum External and Mission Focused u Integration and Leadership u Internal and Tactical Focused ` Environmental concerns Mission fully integrated with Alignment overall mission and u business strategy Environmental ` Business opportunities u Management integrated with stakeholder interests Environmental u Compliance– ` Environment considered ` Product lifecycle design Managed as part of existing operations ` Lifecycle and supply Environmental ` Corporate Social Responsibility Planning chain management Compliance– ` Environment seen as a Ad Hoc cost to accomplishing ` Green buildings ` Market identification and mission ` Environmental Mgt. shaping for new products ` Natural infrastructure and services ` Environment seen as System (EMS) management inhibitor to mission ` Advanced recycling and ` Business operations/ ` Letter of the law P2 programs units developed regulatory compliance ` Energy efficiency for to address unique ` Stopping the bleeding ` Little to no stakeholder cost reduction environmental ` Reactive compliance involvement ` Little to no stakeholder opportunities involvement ` Regulatory shaping Mission Enhancement { Risk Management Operational Excellence Strategic Shaping Compliance Source: Booz Allen Hamilton 2
  • 4. mechanisms to reduce costs—but there is little to no including explicit definition of reporting, roles, stakeholder involvement. Both of these categories fall and authorities? Have adequate resources been under the umbrella of internal and tactical focused. allocated to the environmental organization, including a full complement of policy, technical, The top levels of the continuum are populated by and management staff? Are environmental organizations that are focused, first, on mission considerations formally addressed in routine alignment. At this stage of maturity, stakeholder budget and resource planning? environmental interests drive opportunities to support and enable the organization’s core mission. Moreover, • Implementation. Are robust programs and action the organization places a premium on corporate plans in place to translate long-range environmental and social responsibility planning, including a low strategies into tactical actions? Are environmental carbon footprint, natural infrastructure management, considerations integrated into all core organizational and business units developed to address unique processes (planning, acquisition, R&D, etc.)? Have environmental opportunities. formal communications and training programs been established to ensure requisite competencies The most environmentally conscious organizations and culture? Does the organization proactively practice environmental integration. In these engage in environmental alliances with regulators, organizations, environmental concerns are fully nongovernmental organizations (NGOs), and integrated with the overall strategy; the organization industry groups? emphasizes sustainability in product lifecycle design and supply chain management, as well as in shaping • Monitoring and Reporting. Are mature assessments perceptions for new products and services provided processes (facility, product, supplier) conducted to to create new value propositions. Organizations at manage risks and promote business opportunities? the top two rungs of environmental maturity can be Are periodic audits and inspections supplemented characterized as external and mission focused. by ongoing monitoring and measurement controls? Is there an ongoing system to monitor progress The Green Pulse Check uses these possible stages of against established performance measures? environmental management maturity as the basis of an initial diagnostic profile of an organization across five With each of these capability dimensions addressed critical capability dimensions. (see Exhibit 2 for sample Green Pulse Check capability descriptions), the results of the diagnostic are • Strategy and Leadership. How well defined are the then consolidated into a snapshot report to provide company’s environmental goals and objectives? How a baseline for improvement. In this Green Pulse well does senior management communicate them? Check report, specific elements of the capability Are all of the environmental threats to the mission dimensions are rated from 1 to 5 (1=Ad Hoc; 2=Risk and the environmental consequences in the product Avoidance; 3=Risk Management; 4=Mission Alignment; or service lifecycle clearly measured? For example, 5=Integration and Leadership) to illustrate how is the availability of land and water resources far along the organization is in each aspect of its identified as critical for future operations? sustainability program. • Policy and Guidance. Are the environmental policy roles and responsibilities clear? Are they—and the Sustainable Green Enterprise Framework policy itself—tied to the organization’s mission and The Green Pulse Check, although critical, is strategic objectives? only the first step to formulating a sustainability strategy. Armed with this assessment—showing an • Organizational Capacity. Has a formal organization’s strengths and gaps, opportunities and environmental organization been established, 3
  • 5. successes, the next step involves the very difficult level risks and opportunities are evaluated for job of determining precisely what to focus on and how closely they dovetail with the business’s how to implement it. That’s where the Sustainable mission. Those that appear to appropriately align Green Enterprise Framework comes in. Put simply, the with mission requirements and key organizational diagnostic (Pulse Check) pinpoints vulnerability and priorities are categorized by whether they would the treatment plan (Framework) offers the actionable be enterprise-wide efforts or focused on specific roadmap for improvement. organizations, products, processes, or media. From that, an integrated project team can be formed Each phase of the Framework—Strategic Planning, and a work plan of improvement recommendations Options Analysis, Implementation, and Monitoring (project duration, resources, and scheduling) can and Improvement—defines and integrates discrete be developed. The common denominator among work activities to build holistic solutions key to high leading government and private sector sustainability performing green organizations (see Exhibit 3). programs is a carefully forged plan supported by • Strategic Planning. In this initial stage, a top management that is effectively communicated determination is made about which sustainability throughout the organization—in all, to provide the improvement opportunities the organization will strategic vision and imperative for positive change initially pursue, as informed by internal and external and responsible behaviors. benchmarking and gap analysis. To do this, high- Exhibit 2 | Green Pulse Check Sample Dimensions Environmental Compliance Environmental Mission Alignment Integration and Management Leadership • Environmental function focuses on • Environmental management is an • Environment viewed as contributing • Environment seen as enhancing 1. Strategy and reacting to operational needs and integral part of operations to the organizational mission mission value Leadership meeting the letter of the law • Environmental goals and objectives exceed compliance obligations • Media-specific, compliance- • Enterprise-level policy and guidance • Enterprise-level policy and guidance • Strategic enterprise-level policy 2. Policy and oriented policy that promotes environmental that reflect mission priorities and and guidance that enables mission Guidance performance and risk management strategic objectives and strategic objects through value creation • Dedicated organizational unit • Dedicated organizational unit with • Dedicated, enterprise-wide • Dedicated, enterprise-wide with mid-level positioning and access to senior management environmental structure with environmental organization limited visibility • Adequate levels of environmental senior positioning reporting to Secretariat or 3. Organizational • Limited, compliance-focused management staff • Full complement of strategy, policy, Administrator office Capacity technical staff technical, and management staff • Self-sustaining internal environmental resource pool (leveraging Centers of Excellence, Shared Services) • Limited action planning • Formal action planning • Action planning reflects • Formal action planning integrated • Interactions with planning and organizational strategic objective into overall business planning • Marginal interactions with planning and operating groups operating groups • Routine interactions with all • Planned and scheduled interactions • Environmental performance relevant internal groups with relevant internal groups and 4. Implementation • Limited, technical-focused training focused training • Formal training external stakeholders and communications and communications and communications • Strategic internal/external training • Involved with regulator only for • Coordinates with regulator on • Works with regulator to achieve and communications embedded compliance reporting and reviews regular basis to address mission while exceeding into core business processes adequacy of permits regulatory requirements • Proactively collaborates with regulatory agencies to ensure mission growth can occur • Compliance-oriented inspections • Environmental systems and • Tiered assessments (material, • Business case evaluations and audits Ops risk assessments supplier, facility, fleet, Ops) • Continuous monitoring 5. Monitoring and • Regulatory-imposed reporting • Regular monitoring • Ongoing monitoring and measurement Reporting and measurement and measurement • Internal and external • Performance reporting • Management reporting stakeholder reporting Source: Booz Allen Hamilton 4
  • 6. Exhibit 3 | Process Phases of the Green Pulse Check 1 2 3 4 Monitoring Green Pulse Strategic Options Implementation and Check Planning Analysis Improvement ƒ Objectives Formulation ƒ Options Identification ƒ Action Planning ƒ Audits and Performance and Profiling Assessments ƒ Scoping ƒ Development and − Technical Feasibility Deployment Roadmap ƒ PMO/Project ƒ Baselining Analysis Management ƒ Policy and Process ƒ Work Plan and − Stakeholder Analysis Design and Engineering ƒ Lessons Learned and Scheduling Coordination After-Action Reviews − Economic Analysis ƒ Performance ƒ Benchmarking Management Framework ƒ Internal and ƒ Best Fit Selection External Reporting ƒ In-depth Gap Analysis (including key − Key Indicators ƒ Risk Assessment performance measures) ƒ Management − Performance Recalibration and Prioritization ƒ Business Case Analysis Plans/Systems ƒ Draft Improvement for Transformation − Resource Management Recommendations ƒ Training and Competence ƒ Outreach and Communication Source: Booz Allen Hamilton • Options Analysis. This is the feasibility and technical metrics compared to previous year; suitability phase, when the projects identified compliance data; and actual end of year spending as potentially valuable in the Strategic Planning versus planned spending. Finally, there should analysis are rigorously tested against feasibility be a section with short descriptions of major factors to determine whether they have a sustainability initiatives for the upcoming fiscal year. strong business case and will be supported by To support optimal implementation, training and stakeholders. For private companies, such things awareness programs, outreach, and guidance serve as lifecycle cost, return on investment (ROI), as important enablers for program traction and internal rate of return (IRR), cash flow analysis, and ultimate success. net present value are measured. For government • Monitoring and Improvement. This phase agencies and non-profits, simple payback and cost- entails several interrelated activities to assess benefit ratios or cost-effectiveness analyses are sustainability performance, identify lessons learned also computed. for future application, report to stakeholders to • Implementation. With the feasibility study promote accountability and transparency, and completed, the sustainability program can be put conduct management reviews to determine the into motion. To do this, organizations can build appropriateness, relevance, and suitability of off of the options analysis to create a Greening sustainability initiatives for ongoing improvement Business Action Plan that defines the mission, and value creation. goals, objectives, and organizational structure of a) Audits and Performance Assessments. Routine, the campaign. In subsequent years, this document systematic assessments of sustainability should be updated with a review that shows: accomplishments and progress towards progress against established management and 5
  • 7. established objectives and targets provide essential input on the effectiveness of program Examples of Notable Public and performance. Organizations employ a combination Private Sector Sustainability of leading and lagging indicators to assess Implementation Efforts tactical accomplishments as well as overall management effectiveness in minimizing The State of North Carolina and the Military negative impacts. The State of North Carolina has cooperated b) Lessons Learned and After-Action Reviews. with the military bases at Fort Bragg and Building on the outputs of audits and performance Camp Lejeune to protect 37,000 acres of land. assessments, lessons learned and after-action This land helps the military bases by providing reviews provide valuable information about lands to be used during training exercises positive and negative performance. Frequently, but also acts as protected habitat for the these activities yield insights into internal best local wildlife.1 management practices and successful operating models that can be further leveraged across Walmart the enterprise. Walmart has implemented several efficiency programs in their stores, including elimination c) Internal and External Reporting. Internal of unnecessary lighting in store vending reporting of sustainability successes and machines—saving the company an estimated performance stimulates accountability, promotes US$1.2 million per year. Further, through healthy competition among peer organizations, improved green technologies and logistics, and feeds program momentum. Best-in-class Walmart’s vehicle fleet has been able to reporting processes emphasize transparency, reduce its greenhouse gas emissions by timely data capture and dissemination to internal 38 percent domestically between 2005 organizations, and the use of technology tools and 2008. Walmart believes that their to ensure efficient and accurate information greening efforts saved the company exchange. With growing stakeholder scrutiny almost US$200 million last year.2 of environmental responsibility in fulfilling legal and regulatory mandates, organizations must Baxter International complement internal reporting with formal Baxter International, a medical products external reports and outreach communications. and services company, reported in their For example, in mid-2008, the US Air Force and 2008 Sustainability Report that their waste the US Army issued separate comprehensive management and water management sustainability reports that followed Global efforts saved the company an estimated Reporting Initiative (GRI) guidelines, which US$11.9 million in 2008.3 is considered a standard for environmental performance disclosure. These efforts represented the first publication by the Air Force d) Management Review and Recalibration. While and Army of enterprise-wide performance reports many organizations collect performance data, covering Triple Bottom Line (environmental, those that excel translate these inputs into social, economic) sustainability factors; it discrete actions to build institutional capability, clearly illustrates the governmental trend instill corrective or preventive actions, and towards increasing levels of transparency and promote continual improvement. Formal accountability in environmental issues. 1 http://eedontmiss.blogspot.com/2009/02/ncs-environmental-success-stories.html 2 http://walmartstores.com/Sustainability/7951.aspx 3 http://sustainability.baxter.com 6
  • 8. Wolf Trap Goes Green Recently, Booz Allen partnered with the Wolf Trap integrated planning and performance management Foundation to translate goals for being carbon capabilities—coupled with subject matter expertise neutral, generating zero waste, and inspiring enduring in renewable energy and energy efficiency, green environmental practices within the performing arts procurement, waste management, and green into tangible strategies to position itself as a leading buildings, Booz Allen supported the development model for sustainability amongst the performing of a comprehensive action plan with near- and arts community. long-term objectives, initiatives to achieve those objectives, resources, project benefits, and metrics Booz Allen initially developed the foundation’s to measure progress. baseline and strategic vision for its greening initiatives in collaboration with Wolf Trap’s senior A communications plan was prepared in parallel leaders and volunteer greening team, and the with planning efforts to create a culture of National Park Service (NPS). These efforts provided responsibility throughout the organization and the foundation for structured sessions to help to engage the greater Wolf Trap community in the foundation and NPS develop a strategic plan sustainability initiatives. to support desired sustainability goals. Using management reviews have become commonplace implementing a successful, long-term sustainability as many government organizations respond to program is frequently a wide one that many Executive Order requirements for implementing organizations struggle in vain to close. With the Green Environmental Management Systems (EMSs) Pulse Check and the Sustainable Green Enterprise to address environmental requirements. Framework, Booz Allen offers a straightforward, step- However, the value of this activity is not simply by-step approach to aid in this effort. The ultimate aim in the individual management review—typically is simply to diagnose and improve an organization’s conducted annually, but instead in management’s ability to integrate environmental considerations for engagement and the institution’s commitment to enhanced business value. When that’s achieved, create a culture of excellence using these reviews environmental awareness truly has the potential to as a starting point. By leveraging past successes become a lucrative strategy. and overcoming performance deficiencies through periodic review and recalibration of sustainability Ready For What’s Next policy and strategic goals, organizations can more At Booz Allen Hamilton, we take pride in helping effectively promote and routinize sustainability to the federal government prepare fully for upcoming ensure ongoing mission value. challenges. With deep expertise in the complexities of today’s fast-changing energy markets and decades Conclusion of experience helping governments optimize their use With so much riding on sustainability and “going” of facilities, installations, and other infrastructure, we green, in most organizations the confusion about how are uniquely positioned to look ahead and collaborate and why dissipates relatively quickly; the gains become with our clients on energy efficiency, green IT, and obvious and the necessity becomes paramount. opportunities and challenges related to climate But the gap between understanding the need and change legislation. 7
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  • 10. About Booz Allen Booz Allen Hamilton has been at the forefront of information technology, systems engineering, and strategy and technology consulting for 95 years. Every program management, Booz Allen is committed to day, government agencies, institutions, corporations, delivering results that endure. and infrastructure organizations rely on the firm’s With more than 22,000 people and $4.5 billion in expertise and objectivity, and on the combined annual revenue, Booz Allen is continually recognized capabilities and dedication of our exceptional people for its quality work and corporate culture. In 2009, for to find solutions and seize opportunities. We combine the fifth consecutive year, Fortune magazine named a consultant’s unique problem-solving orientation Booz Allen one of “The 100 Best Companies to Work with deep technical knowledge and strong execution For,” and Working Mother magazine has ranked the to help clients achieve success in their most critical firm among its “100 Best Companies for Working missions. Providing a broad range of services in Mothers” annually since 1999. strategy, operations, organization and change, To learn more about the firm and to download digital versions of this article and other Booz Allen Hamilton publications, visit www.boozallen.com. 9
  • 11. Principal Offices ALABAMA KANSAS OHIO Huntsville Leavenworth Dayton CALIFORNIA MARYLAND PENNSYLVANIA Los Angeles Aberdeen Philadelphia San Diego Annapolis Junction San Francisco Lexington Park SOUTH CAROLINA COLORADO Linthicum Charleston Colorado Springs Rockville TEXAS Denver MICHIGAN Houston FLORIDA Troy San Antonio Pensacola Sarasota NEBRASKA VIRGINIA Tampa Omaha Arlington Chantilly GEORGIA NEW JERSEY Falls Church Atlanta Eatontown Herndon HAWAII McLean Honolulu NEW YORK Norfolk Rome Stafford ILLINOIS O’Fallon WASHINGTON, DC The most complete, recent list of offices and their and addresses and telephone numbers can be found on www.boozallen.com by clicking the “Offices” link under “About Booz Allen.” www.boozallen.com ©2009 Booz Allen Hamilton Inc.